right at the end of every file that has the name starting with index on that domain.

currently I am combing through each and every file on the server with the name index(and others randomly) for this change and removing it, but this is a lengthy process and I am not sure if this is the right/entire fix for it.

What is the best way to deal with this type of a scenario?
(The virus on the PC has be cleaned)

As ChrisS says, wipe and restore if at all possible. If you are wrong about how they got in (and the hackers do not try to break into indivual sites, they generally do it en-mass), they will use the same method again and again. Rackspace hosting has some advice on Dealing with a site compromise as well.